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Divorce during tax season

On Behalf of | Apr 11, 2023 | Divorce |

Tax season is something many Mississippi residents do not look forward to. Doing taxes can be extremely cumbersome for some people, especially if they end up owing money.

If you are going through a divorce during tax season, that adds another complication into the mix, and you might have many questions about the effect a divorce can have on your taxes.

Your filing status

One of your first questions likely involves how to file. The answer depends on your marital status at the end of the last tax year.

You can file separately if your divorce was completed on December 31 of the previous year. Completed means that you have a divorce decree officially dissolving your marriage. It does not mean that you filed for divorce, that you are separated from your spouse or that your divorce is close to being final but not quite final yet.

If your divorce was not completed on December 31, you can choose to file married or married but separate. You can file as married because you were still legally married for the entire tax previous tax year.

However, you can file married but separate if you have a pending divorce. When you file married but separate, you only report your own income and deductions. It is essentially the same as filing separately, with the qualification that you are still married but filing as if you were a single person.

Before you file, it is best to review the outcomes of filing as married or married but separate and choose the one that gives you the best financial benefit. Some divorcing couples still choose to file as married because they will get more money back, even if they are living apart and maintaining separate lives.

Filing as head of household

You may be concerned that you will not get as much money back, or even owe money, if you must file separately. An option in this situation is filing as head of household.

There are requirements for filing as head of household. You must be single, divorced or legally separated, show that you paid more than half the costs of maintaining a home for the year and you must have lived with a qualifying dependent for more than 6 months of the year.

This can get tricky if you and your former spouse have minor children. The parent who has primary custody of the children will be the one who can file as head of household, since they are the parent who had custody of the children for more than half the year.

Parents who share custody equally could both technically qualify as head of household, but only one parent can file as head of household. One solution in this situation is to alternate who claims it each year.

Alimony and child support

Alimony can also impact your taxes. If you pay alimony, you can typically deduct alimony payments on your taxes, while if you receive alimony, you must report it as income.

These rules do not apply to child support payments. Child support payments do not need to be reported as income, nor can they be claimed as a deduction on tax returns.

Divorce attorneys are equipped to handle every aspect of your divorce, including tax implications. They can review your divorce and tax situation and advise you on the best options.